Can someone point me in the right direction? I can find the usual references for bad debt relief but nothing that covers non payment after deregistration from the point of view of the creditor.
We have two companies A and B, different ownership and directors, same admin team. A makes Sales to B with VAT.
B ceases trading and deregisters for VAT having claimed back input Tax.
B fails to pay the invoices, if B was still registered A would claim bad debt relief and B would add back the input tax.
Questions:
1) Is there a procedure for B to repay input tax claimed to HMRC?
2) Given the connection between A and B should A claim bad debt relief? would we be looking as unjust enrichment?
Replies (2)
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Is A eligible for bad debt relief? Yes. Unjust enrichment does not apply.
Should B adjust for its input tax? Yes. Use form VAT 652 to adjust.